The need to break down the barrier between brand and performance marketing has changed the shape of agencies, with a traditional creative focus more frequently complemented by data-oriented work that is driving a larger share of growth for the category. Mekanism is among the agency brands that have seen their remit transformed by climbing demands for full-funnel offerings, with the shop aiming to blend the “soul” of marketing with science, as CEO Jason Harris terms it.
Mekanism last year was acquired by Plus Company, a fledgling, privately held ad network based in Canada that has used the agency, which started in San Francisco but now has offices in Chicago, New York, Los Angeles and Chicago, as a means to grow its U.S. footprint. In a patchy ad market that has roiled some of the larger ad-holding groups and cooled M&A, Mekanism has stayed active and even expanded abroad. Account wins for 2023 include Harmless Harvest, Fossil and The Wine Group.
Mekanism in September acquired the Madrid-based design firm Zapiens, a deal that wouldn’t have occurred without Plus Company’s backing, according to Harris. Mekanism is also tapping into a new predictive intelligence solution developed by Plus Company that aims to modernize mixed media modeling and measurement. Called Plus AIOS, the tool has helped early client testers reduce cost-per-conversion by 29% and improve campaign efficiency by 23%, optimizing an estimated $2 billion worth of media spend.
Marketing Dive caught up with Harris at Advertising Week New York last week to discuss the Plus Company deal a year-plus out, what motivated the Zapiens acquisition and why he’s optimistic for 2024.
This interview has been edited for clarity and brevity.
MARKETING DIVE: When we last spoke about the Plus Company acquisition, you said it took 20 years to build Mekanism, but now that you’re pushing for a full-funnel offering, you want that to happen in just a few years. What’s the progress been like?
JASON HARRIS: It’s been really good. We recently updated our positioning. We’re still about soul and science. Soul is the long-term brand-building that we’re known for and then we’ve added all of these other services that are the science side, including always-on digital experiences like one-to-one marketing, loyalty programs, CRM. Our new offering is that we’re a modern creative agency that drives business growth.
Marketing budgets have gotten really scrutinized. With every dollar that goes out, you have to show what the value is. We’ve added those lower-funnel services rather quickly, and we’re getting a lot of wins by offering both of those. CMOs have so much to worry about now. They just want an agency that can do more. They don’t want to have 10 agency partners. In the agency landscape, if you’re just focused on the brand-building skills and not adding those other pieces, that’s going to be a harder proposition to win business on.
MARKETING DIVE: I’ve heard that sentiment a lot at Advertising Week, that the wall between brand and performance is coming down a bit.
HARRIS: I think it has to. With performance agencies that are known for delivering lower-funnel work, I don't know if clients buy that they can do the brand-building work. For us, we have to prove to clients that we can drive short-term business growth as well. That’s been a big change.
The network [Plus Company] invested a lot of money in building a measurement platform called Plus AIOS, which stands for All In One System. It’s a measurement system to plan, optimize and measure campaigns and it’s built with predictive intelligence. It’s to help CMOs understand the value of the dollars they spend and then predict, based on that experience, where they’re best suited for putting their dollar and what the outcome is going to be. Without being acquired, I think we’d be farther behind where we need to be. We certainly would’ve spent millions and millions of dollars to build this system.
MARKETING DIVE: It feels like the Plus Company deal came in right under the wire.
HARRIS: You can’t do a deal now. No one can borrow money, it’s too expensive. You’ve got to know what you’re doing when you’re getting acquired. If you’re not laser-focused on growth, then it’s going to be bumpier. Because it’s never smooth. There are always cultures coming together.
For us, we did it at the right time. It’s been good, once you get past the internal selling and explaining to people why you’re doing it. For our team, it’s really future-proofing their skills. If they’re only in brand-building land and they’re not learning the lower-funnel digital stuff, they’re going to be limited if they stay at Mekanism or go somewhere else.
MARKETING DIVE: How did the Zapiens acquisition come together?
HARRIS: We weren’t looking [for agencies to acquire] until we did the Plus Company deal. And then we were looking at the near-shore companies we could find that were smallish and digital experts. What struck me about Zapiens was their design. They know UI/UX, they’re great at digital capabilities, but it wasn't sacrificed by their design capabilities. We went over there a couple of times, broke bread with them, and said, “Oh, these cultures are going to mesh well.”
We’re new to it so we’re trying to find synergies: What clients we could bring them into, how we could grow their business, how we sell their services.
MARKETING DIVE: It’s also interesting that they’re in Madrid. Is that international footprint new territory?
HARRIS: It’s new for us. The U.S. is expensive, so that was one reason. But really what drew us to them is their design. European design eyes are sharp. It was new services, affordable and good product, the trifecta.
MARKETING DIVE: It's been, in the macro sense, a tough year. How have you navigated winning new business?
HARRIS: One trend I've noticed in Q4, and I talk to a lot of agency CEOs, is usually there’s a lot of organic growth and a big bump because clients, whatever money they have left over, they spend it. That trend has been way down this year. I haven't seen it like that in maybe a decade.
There are a couple of things percolating. Our clients, they’re sticking with us, but they’re not adding incremental dollars. The other trend is new business is insane. The amount of pitches and the opportunities for new clients is way up in Q4, but the organic spend is down. To me, that signals if clients are doing less spending, they’re using Q4 to find new resources so they can hit 2024 with new partners.
I think 2024 is going to be a big year. I'm feeling hopeful. But it has been a hard year. Interest rates are way up, it’s really hard to borrow money. At the end of the day, if you can’t borrow money, it’s going to be harder to do M&A activity, it’s going to be harder for companies to grow and you’ve got to be able to stoke the economy. That has to come down.
MARKETING DIVE: Say that the situation does ease up a little bit. What are the areas where you would be interested in investing in or acquiring next?
HARRIS: Performance media. We have a strong media group, but we need to get sharper and better at performance media, specifically. Now that we’ve got the digital experience, the lower-funnel work going, it’s time to bolster up media with performance. That’s our next area to target when we can breathe a little more.